MUMBAI/COPENHAGEN, March 28 (Reuters) - Mobile phone makerNokia Oyj has played down a multi-billion rupee taxdemand from India, saying it did not have to pay any part of thedemand for now and would continue to fight the claim.
Indian tax officials demanded Nokia pay 20.8 billion rupees($383 million) in upaid taxes, stepping up claims againstforeign companies, although the Delhi High Court issued a stayon the demand.
The tax order, if enforced, would add to pressure on Nokia'sfinances which are already being strained by falling sales. Thecompany axed its annual dividend payment for the first time inits history to shore up its cash position.
"Nokia reiterates its position is that it is in fullcompliance with local laws as well as the bilaterally negotiatedtax treaty between the governments of India and Finland and willdefend itself vigorously," the company said in a statement.
Nokia has seen a rapid dwindling of its cash reserves andended 2012 with net cash of 4.4 billion euros ($5.6 billion),down 22 percent from a year earlier.
It was not clear how long the stay on the tax demand wouldremain in force.
The order from the Indian tax officials covered five fiscalyears starting from 2006/07, according to a March 22 notice onan Indian court's website.
The demand comes as Asia's third-largest economy isaggressively pursuing tax claims against foreign companies as itseeks to rein in its budget deficit to avoid a credit ratingdowngrade.
Last month, a government official said tax authorities had accused Cadbury Plc, now part of U.S. snacks firm MondelezInternational Inc, of misleading them about productionfrom a new factory to avoid about $46 million in taxes.
Royal Dutch Shell Plc, Vodafone Group Plc and LG Electronics Inc are also among companiesinvolved in tax disputes in India and have challenged theorders.
Nokia said it filed a writ before the Delhi High Courtpetitioning against the order. The court has asked the taxdepartment to file a "counter-affidavit" within one week.
A lawyer for Nokia India assured the court that the companywould not move any funds outside India, except in the normalcourse of business, until the date of the next court hearing,the court document showed.
Countries like India are crucial for Nokia's attempt to holdon to global market share after giving up its spot as marketleader to Samsung. It has been expanding its Ashaline of low-end smartphones and India is widely seen as a keymarket for such cheaper models.
The company last month objected to tax officials enteringits factory in Chennai in southern India, which is one of itsbiggest facilities. Nokia said it has invested over $330 millionin Chennai since setting up the factory in 2006.
Vodafone (VOD)
